Completed Mixed AidData Chinese Aid

China Eximbank provides RMB 399 million government concessional loan for MA-60 Aircraft Acquisition Project (Linked to Record ID#98029, 96221)

¥399M RMB

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Myanmar Foreign Trade Bank (MFTB)
Country	Myanmar
Start Date	Jan 01, 2009
End Date	Nov 02, 2031
Duration	8,340 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`35601`

Grant Description

China Eximbank provides RMB 399 million government concessional loan for MA-60 Aircraft Acquisition Project In 2009, China Eximbank and Myanmar Foreign Trade Bank (MFTB) signed an RMB 399 million government concessional loan (GCL) agreement for the MA-60 Aircraft Acquisition Project. The GCL carries a maturity of 20-years (with a final maturity date of 2029).

Its interest rate and grace period are unknown. The Government of Myanmar on-lent the proceeds of the GCL to Myanmar National Airlines.

The proceeds of the GCL were to be used by the borrower to finance a commercial contract between Myanmar National Airlines and China National Aero-Technology Import & Export Corporation (CATIC), which was signed in December 2009. As of December 31, 2018, the loan's amount outstanding was RMB 375.406 million.

The purpose of the project was to acquire three MA-60 aircraft for Myanmar National Airlines. CATIC was the contractor responsible for project implementation. The aircraft were successfully delivered in late September 2010.

However, there are some indications that the China Eximbank loan for the MA-60 Aircraft Acquisition Project may have financially underperformed vis-a-vis the original expectations of the lender.

After a string of accidents, two of the aircraft, XY-AIP (msn 807) and XY-AIQ (msn 808), were withdrawn from service in 2013.

According to U Kyaw Mo, the Deputy Minister of Myanmar's Ministry of Transport and Communications, the third aircraft, XY-AIO (msn 806), was grounded in 2013 'as it was not fit to fly'.

Myanmar National Airlines also failed to generate sufficient revenue to facilitate loan repayment, so the central government had to assume responsibility for its loan repayment obligations.

Then, in 2020, China Eximbank and the Government of Myanmar signed a debt suspension agreement as part of the G-20 Debt Service Suspension Initiative (DSSI).

Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between May 1, 2020 and December 31, 2020 under 3 buyer’s credit loan (BCL) agreements, 6 government concessional loan (GCL) agreements, and 27 preferential buyer’s credit (PBC) agreements (as captured via Record ID#98029).

Debt service payments under many of these loan agreements were again deferred in 2021 (as captured via Record ID#96221).

📋 Staff Comments

The Burmese project title is ေလယာဥ္သုံးစင္း၀ယ္ယူေရး.
The China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020.
Myanmar National Airlines, formerly Union of Burma Airways, Burma Airways, and Myanmar Airways, is a state-owned airline and the flag carrier of Myanmar, based in Yangon.
According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 6.0074-years in 2009. AidData estimates the grace period of the China Eximbank loan that supported the MA-60 Aircraft Acquisition Project by using this figure. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 5. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all official sector lending from Chinese creditors to government and government-guaranteed borrowing institutions in Myanmar was 3.9534% in 2009. AidData estimates the interest rate of the China Eximbank loan that supported the MA-60 Aircraft Acquisition Project by using this figure. See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0

📚 Sources & References

Sri Lanka to buy six transport aircraft from China: report
China selling MA60s to Myanmar and Sri Lanka
Chinese-made Xinzhou - six O civilian airliner first export to Myanmar
PwC Myanmar Weekly Business Intelligence
Government seeks funds to repay loan for 3 grounded MNA aircraft
Restructuring, cost efficiencies needed to lift MNA out of the red
Over $ 3 billion and nearly 2 billion yuan in loans from China in four years
Between 2006 and 2011
Myanmar received more than US $ 3 billion in loans from China and nearly two billion Chinese yuan in loans, the largest amount in the power and energy sectors.
Disclosure of 20 Chinese loans from 2006-2011 by Ministry of National Planning and Economic
Myanmar seeks funding to pay off defunct MA-60 fleet
Myanmar to pay for 3 defective planes
Myanmar’s National Carrier Losing Millions
China-made Xinzhou airliner accidentally grounds Myanmar Airlines
XAC International delivers three Xinzhou 60 aircraft to Myanmar
THREE CHINESE PLANES BOUGHT ON LOAN CAN NO LONGER BE USED
BUT THE DEBT HAS NOT BEEN PAID
Myanmar National Airlines still facing losses
China Overseas Development Finance Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.

All Grantees

Myanmar Foreign Trade Bank (MFTB)

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